TABLE 4-3 -Refer to Table 4-3. the Government Imposes a $1.20 Price

Multiple Choice

TABLE 4-3

-Refer to Table 4-3. The government imposes a $1.20 price ceiling at the same time that there is a substantial decrease in the price of sport utility vehicles. (Assume that sport utility vehicles have very high fuel consumption.) What is the expected result?

A) The price of gasoline will equal $1.20 per litre, and a shortage of gasoline is created.
B) The price of gasoline will equal $1.20 per litre, and the quantity demanded equals the quantity supplied.
C) The price of gasoline will rise above $1.20 per litre, and a surplus of gasoline is created.
D) The price of gasoline will fall below $1.20 per litre, and a shortage of gasoline is created.